Banking giant Flagstar Bancorp ($13.42 -0.27%) is selling mortgage document imaging business DocVelocity to Capsilon.

Terms of the transaction were not disclosed.

Flagstar says Capsilon developed a large part of the technology driving DocVelocity and has extensive experience marketing and selling the product to the mortgage industry.

Flagstar used DocVelocity as its paperless, mortgage processing solution for customers in the wholesale segment and will continue to do so.

"DocVelocity has played an important part in establishing and solidifying Flagstar’s position as a leader in paperless mortgage processing for our customers," said Jason Dufner, senior vice president of change management at Flagstar. "That’s a differentiator in the marketplace that we intend to maintain."

Capsilon provides cloud-based document sharing and imaging services for mortgage lenders. The company has spent six years working with Flagstar on solutions to replace paper-based mortgage processing systems.

"Flagstar has been a great partner for us," said Sanjeev Malaney, chief executive officer at Capsilon. "Their vision and leadership in the mortgage industry was key in driving adoption of our technology in the market. Our growth has allowed us now to integrate vertically, taking responsibility for everything from software development to sales and service. DocVelocity customers will benefit from our focus and additional capabilities."